Shoe Business Plan

8/11/2019 Shoe Business Plan

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Executive Summary

The Year 1 season will be a great one for women looking for distinctive outdoor clothing online. Liquid

Culture will eliminate the middle man and offer creative outdoor clothing that is both functional and

beautiful. The savings are passed on to our customers who will be paying a fraction of what they

normally do for current retreated fashion in stores.

Liquid Culture's Year 1 line consists of the best fabric, designs and styling on the market. Larry Wilson

and Maggie Granger, co-owners of Liquid Culture, have fifteen years of experience between them in the

outdoor garment industry. Maggie has been a senior clothing designer for Manic Woman Clothing for

the past seven years. Larry has been the website administrator for South Face the past eight years.

Another strength of Liquid Culture is that it will not maintain any clothing inventory. Liquid Culture has

contracted with Magic Clothing Company, located in Los Angeles, California, to produce and ship all

Liquid Culture clothing. Our design team will work closely with the Magic's Indonesian-based

manufacturing facilities. The Magic Clothing Company will maintain the inventory and will produce

sufficient product to meet the planned demand.

1.1 MissionLiquid Culture's mission is to present consumers with designs, styling and clothes that energizes any

outdoor activity. Whether it be snowboarding, running along the beach, or drifting down a river, Liquid

Culture has comfortable, durable clothing that will look and feel wonderful.

1.2 Keys to Success

Accessible website that is entertaining to surf. Like a trip to your favorite store where you always

find something new that you want.

Establishing a strong advertising campaign in a traditional media vehicle; i.e. magazines.

Excellent vendor relationship that will facilitate quality manufacturing of Liquid Culture's clothing

and quick shipment of orders.

Acquiring an excellent design staff.

Company Summary

Liquid Culture will offer creative women's outdoor clothing, online, that is both functional and

beautiful. Larry Wilson and Maggie Granger, co-owners of Liquid Culture, will create a cost-effective

operation that will el iminate the cost of inventory by having a third-party, Magic Clothing Company,

handle all manufacturing and shipping of clothing to the customer. Liquid Culture will process the order

and collect the payment online. The order will then be sent to Magic Clothing Company to be filled and

shipped. Liquid Culture will focus on clothing design and marketing of its products.

2.1 Start-up Summary

Liquid Culture's start-up costs consists mostly of design and marketing. Liquid Culture has 260,000 in

investments and 200,000 in a short-term loan.

Start-up Funding

Start-up Expenses to Fund 58,500

Start-up Assets to Fund 401,500

Total Funding Required 460,000

Assets

Non-cash Assets from Start-up 0

Cash Requirements from Start-up 401,500

Additional Cash Raised 0

Cash Balance on Starting Date 401,500

Total Assets

401,500

Liabilities and Capital
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Liabilities

Current Borrowing 0

Long-term Liabilities 200,000

Accounts Payable (Outstanding Bills) 0

Other Current Liabilities (interest-

free)0

Total Liabilities

200,000

Capital

Planned Investment

Investor 1 130,000

Investor 2 130,000

Other 0

Additional Investment Requirement 0

Total Planned Investment 260,000

Loss at Start-up (Start-up Expenses) (58,500)

Total Capital 201,500

Total Capital and Liabilities 401,500

Total Funding 460,000

Start-up

Requirements

Start-up Expenses

Legal 1,000

Stationery etc. 500

Brochures 0

Consultants 5,000

Insurance 0

Rent 2,000

Leased Office Equipment 10,000

Computer

Equipment/Software30,000

Website

10,000Other 0

Total Start-up Expenses 58,500

Start-up Assets

Cash Required 401,500

Start-up Inventory 0

Other Current Assets 0

Long-term Assets 0

Total Assets 401,500

Total Requirements 460,000

2.2 Company Ownership

Liquid Culture is owned by Larry Wilson and Maggie Granger.

Products

Liquid Culture will sell women's outdoor clothing online. We will offer outdoor clothing for almost every

type of active use. We will focus on the seasonal clothing demands of our customers including the

following:

Fleece outerwear.

Rain gear, waterproof breathables, as well as coated nylon.

Synthetic clothing for outdoor activities.

Hats.

Shorts.

Pants.

Shirts.


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Market Analysis Summary

In the past 15 years, women's outdoor wear has grown into a billion dollar niche in the clothing industry.

The popularity of the Internet has launched a number of online stores for women's outdoor wear but no

company is exclusively selling their products online. There are a number of reasons for this but the

strongest is that the concept is new and untested. Will customers buy something that they wear that

can only be seen online? We believe they will, if the process is fun and the products are great andcheap.

The key is marketing our target customers in the traditional advertising medium for fashion, i.e. women

fitness magazines.

The ads will focused on the eliminating the middle man in your clothing budget and stepping up to the

distinctive style of Liquid Culture. The company logo will also be an important marketing tool in bringing

customers to our website.

4.1 Market Segmentation

Liquid Culture will be focusing on two distinct groups of women that purchase outdoor clothing:

Women 17-25 years of age: Youth drives the market so this is the important group to attract to thewebsite. They have less money than the older group so we must give them what they want for

less. The key is to have inexpensive selections in each clothing group that have the popular cut.

The company's logo attractiveness to this group can not be stressed strongly enough. The initial

small purchases will grow larger over time.

Women 26-40 years of age: They are the core group that will drive Liquid Culture's success. This

target group is responsible for the growth of outdoor women's wear. They will be harder to pull

into the website. Once there, the key will be promoting the quality, attractiveness and savings. In

addition, we will have to assure that the purchase will fit the way the customer wants it to. It will be

crucial that the return policy is hassle-free and speedy.

Market Analysis

Year 1

Year 2

Year 3

Year 4

Year 5

PotentialCustomers

Growth CAGR

Women Ages 16- 20% 6,000,000 7,200,000 8,640,000 10,368,000 12,441,600 20.00%
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25

Women Ages 26-40

15%

5,000,000

5,750,000

6,612,500

7,604,375

8,745,031

15.00%

Other

0%

0

0

0

0

0

0.00%

Total

17.81%

11,000,000

12,950,000

15,252,500

17,972,375

21,186,631

17.81%

Strategy and Implementation SummaryLiquid Culture will win market share in the women's outdoor clothing niche by aggressively pursuing

visibility with its target customers.

5.1 Competitive Edge

Liquid Culture's competitive edge is its focus on the process than on product. The website is just the

endpoint of an entire marketing program to drive customers' interest in Liquid Culture. Though we have

confidence in the quality and attractiveness of our products, we know that building the road to the

website is our most important job.

Larry Wilson's experience with South Face is pivotal to the success of Liquid Culture's website. South

Face's website averaged five million hits a year and is considered one of the most accessible and

attractive websites in the clothing industry. His experience is invaluable in assuring customers'satisfaction with the shopping experience online.

Larry will introduce a new clothing measurement feature that is fun to use and will reduce customers

confusion on how the clothing will fit. This will increase customer satisfaction and reduce returns.

Maggie Granger will be in charge of the clothing design team. As senior clothing designer for

Manic Woman Clothing, she watched the Manic Woman's sales grow by 20% for the past five

years. Her clothing designs have been praised in the industry and have spawned many imitators. With

Liquid Culture, Maggie is ready to change how quality women's outdoor clothing is sold.

Liquid Culture's agreement with Magic Clothing Company is another strong competitive advantage. Our

design team will work closely with the Magic's Indonesian-based manufacturing facilities. The Magic

Clothing Company will maintain the inventory and will produce sufficient product to meet the planned

demand. This will keep production costs low for products and put a cap on Liquid Culture's overhead.

5.2 Marketing Strategy

Liquid Culture's marketing strategy is a simple one. In women's fitness magazines like Self, Shape and

Strive, Liquid Culture will introduce customers to their products and website. We will also advertise in

CosmoGirl and Ellegirl magazines.

For the first two months, Liquid Culture will offer 10% off for all purchases under 100 and 15% off all

purchases over 100. We will offer the same discount strategy three more times during the year when

new seasonal clothing is introduced.

5.2.1 Pricing Strategy

Liquid Culture's pricing strategy is to pass on most of the store mark-up to the consumer in reduced

price for clothing. This advantage has no negative impact on our sales profit and will also absorb some

of the initial cost of offering discounts during our first three months of operation.

5.3 Sales Strategy

Liquid Culture will launch a 245,000 ad campaign targeted at our core customer groups. The focus of

the ads will be to "keep the money you give to the middleman" and use it to get outdoors and enjoy

life. Liquid Culture's attractive logo will be heavily displayed in these ads. We estimate it will take most

of the year to build our sales to the point where we begin to show a profit.

Liquid Culture will offer discounts at various times of the year to even out seasonality and build initial

awareness of the website.


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5.3.1 Sales Forecast

We expect sales to increase at a steady rate for the first year. It will begin slow as we open, but will

quickly pick up as our customer base increases. Liquid Culture will see a sales increase of 38%

between the first and second year. We feel that we can accomplish this steady goal and maintain this

amount of sales.

Sales Forecast

Year 1 Year 2 Year 3

Sales

Clothing 2,170,000 3,000,0004,300,000
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Other 0 0 0

Total Sales 2,170,000 3,000,0004,300,000

Direct Cost of Sales Year 1 Year 2 Year 3

Clothing 1,249,000 1,800,0002,580,000

Other 0 0 0

Subtotal Direct Cost of Sales 1,249,000 1,800,0002,580,000

Management Summary

Larry Wilson will manage the marketing team, as well as the development and administration of Liquid

Culture's website. Maggie Granger will be in charge of the clothing design team. She will also manage

the production of the designs by Magic Clothing Company.

6.1 Personnel Plan

Besides Larry and Maggie, Liquid Culture will have a staff of eight:

Three member clothing design team.

Web administrator.

Two member marketing team. Office manager.

Accountant.

Personnel Plan


Marketing/Website Director 84,000 90,000 95,000

Design Director 84,000 90,000 95,000

Designers 144,000156,000166,000

Web Administrator 48,000 52,000 56,000

Office Manager 36,000 39,000 42,000

Marketing Staff 96,000104,000112,000

Accountant

39,600

44,000

48,000

Other 0 0 0

Total People 8 8 8

Total Payroll 531,600575,000614,000

Financial Plan

The following is the financial plan for Liquid Culture.

7.1 Break-even Analysis

Our break-even analysis is based on running costs, the costs we incur to keep the business running, not

on theoretical fixed costs that would be relevant only if we were closing. Fixed costs include payroll,

rent, utilities, and marketing costs.
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Break-even Analysis

Monthly Revenue Break-even 177,248

Assumptions:

Average Percent Variable Cost 58%

Estimated Monthly Fixed Cost 75,228

7.2 Projected Profit and Loss

The following table and chart are the projected profit and loss for three years.
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Pro Forma Cash Flow


Cash Received

Cash from Operations

Cash Sales 2,170,000 3,000,000 4,300,000

Subtotal Cash from Operations 2,170,000 3,000,000 4,300,000

Additional Cash Received

Sales Tax, VAT, HST/GST Received 0 0 0

New Current Borrowing

0

0

0

New Other Liabilities (interest-free) 0 0 0

New Long-term Liabilities 0 0 0

Sales of Other Current Assets 0 0 0

Sales of Long-term Assets 0 0 0

New Investment Received 0 0 0

Subtotal Cash Received 2,170,000 3,000,000 4,300,000

Expenditures Year 1 Year 2 Year 3

Expenditures from Operations

Cash Spending 531,600 575,000 614,000

Bill Payments 1,590,840 2,541,460 3,387,998

Subtotal Spent on Operations 2,122,440 3,116,460 4,001,998

Additional Cash SpentSales Tax, VAT, HST/GST Paid Out 0 0 0

Principal Repayment of Current

Borrowing0 0 0

Other Liabilities Principal Repayment 0 0 0

Long-term Liabilities Principal

Repayment44,796 44,796 44,796

Purchase Other Current Assets 0 0 0

Purchase Long-term Assets 0 0 0

Dividends 0 0 0

Subtotal Cash Spent 2,167,236 3,161,256 4,046,794

Net Cash Flow 2,764 (161,256) 253,206

Cash Balance 404,264 243,008 496,214

7.4 Projected Balance Sheet

The following is the projected balance sheet for three years.
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Documents

Shoe Business Plan